Warren Buffett and housing

Warren Buffett is positioning Berkshire Hathaway Inc. (NYSE: BRK-A) to profit when the housing and property market returns to more normal levels. Now, he is teaming up with what many investors consider a “Buffett rival.” Berkshire Hathaway Inc. (NYSE: BRK-A) is teaming up with Leucadia National Corp. (NYSE: LUK) to acquire the North American mortgage and servicing operations of Capmark Financial Group Inc. Interestingly enough, a company affiliated with Buffett and Berkshire Hathaway called HomeServices of America made a real estate firm acquisition in Chicago earlier this week.

Berkshire Hathaway probably has $50 billion that can be used for deals in the near-term and intermediate-term.

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The S&P500: it's coming

This are strange times. Whatever perspective you’re looking to these markets, it’s not easy to determine what direction they will go.
As far as stocks are concerned, our lighthouse remains the S&P500. Pressure is building. This is our take: we’re bullish as long as stocks stay within the wedge.But if the S&P 500 breaks below 975, then look out below. It's going to get ugly real fast.

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Dollar

At the same time the gold price is climbing, we observe also strength in the dollar. Sentiment is bearish, but the odds favor more and more the other way.
Everybody thinks the dollar is doomed. However, if the whole planet looks in one direction, the trade is done at the opposite side.

Look to this chart and the wedge.

We like the PowerShares US Dollor Index Bullish Fund ETF (ticker: UUP) tracking the performance of the US Dollar index as a tool to play an eventual break out.

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Gold

Gold shines.
The start of the new month is triggering strange things in this market
From Elliot Wave International we borrow this remarkable chart:

Fascinating, those waves...

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If you can't beat them...

From the Wall Street Journal

Since Aug. 5 — when we saw names like Fannie, Freddie and AIG reawaken — trading in those three stocks, plus Bank of America and Citi, has averaged about 31.5% of the NYSE consolidated volume. At their peak on Monday, these five stocks accounted for nearly 43% of the NYSE consolidated volume.
AIG is surging day after day. Let me remind you this company was in default in 2008 and required 3 bailouts

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Bullish

Everybody is bullish. So who will push these markets higher?
When the majority of the crowd are buying call options, it’s time to start looking at the other trade. Sentiment is very one sided.

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Inspiration

For those on the sidelines these are frustrating times. While every technical indicator is pointing to a highly overbought situation these markets are going higher… and higher…
Well, trees can grow a lot but not into the sky.
For those being long: enjoy the ride but mind your step. And use stops to protect your money.

So what do we see?

• Brazil continues to surge... the commodity-rich country's Bovespa index makes new 52-week high.
• Starbucks keeps climbing... coffee shop rockets to 18-month highs.
• Oil hits 10-month high... recovering economy drives crude near $75. Sphere: Related Content

Rally

Good to know:

• Coffeehouse Starbucks continues huge rally to reach new 52-week high... up 133% from March low.
• Shoe specialist Crocs hits new 52-week high... up 500% from March low.
• Uranium giant Cameco climbing... up 40% this year.

And there is the weekend. Time to visit the pub and meet the lads. Summertime is calling Sphere: Related Content

Natural Gas

How are they doing ? The commodity sector and the S&P500, we mean.
We have a chart whith the key commodity related ETFs and the S&P500 starting in March. The US Oil Fund ETF (ticker: USO) and the Base Metals ETF (ticker: DBB) were able to cope with the pace of progress of the S&P500. The Natural Gas ETF (ticker: UNG) was the weakest sector of this group.

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Atlanta Pipeline Partners

I know, it's already some time we showed a chart that's interesting us. But what about this one?

We’re looking to Atlas Pipeline Partners (ticker: APL). The normal chart shows two averages crossing each other. Nice.

The renkochart is already showing the breakout.

Unfortunately, people and friends, this PC is not allowing me to paste the charts.... :-(

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Bulls versus Bears

Long before there were leveraged ETFs, the only leveraged play in town were the mutual funds of Rydex. Now here’s something strange: these funds seem to have become the perfect contra-indicator for the markets; if the bears are active (the red line) than the indices are climbing and if the bulls (the green one) are on top than the trend is down.
How come?
Stupid investors who systematically take the wrong side of the fence?
Or something else – as there are: these fund are used as a hedge. What makes sense.

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Bullish Percent Index

The bullish percent index is a momentum-based indicator that generates buy and sell signals based on oversold and overbought conditions. A sector is overbought when the BPI rallies above 70 and then turns lower. The oil sector is oversold whenever BPENER drops below 20. It generates a buy signal when it turns higher from oversold levels what exactly happened last week.
Once again...

Look to the red line which is the BPENER(GY).

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Iron ore

Spot iron ore prices are fast approaching $100 a tonne, well above the levels at which miners and steelmakers in Japan, South Korea and Europe have struck supply deals, as demand outside China recovers.
The surge in spot prices has spurred several banks to forecast that benchmark - annually negotiated - prices will rise next year, reversing their previous expectations of a fall in prices. "The market is going up, up and up," said one London-based iron ore broker.
Spot ore prices in China rose this week to $93 a tonne - including freight - and industry observers said the market could hit a year high above $100 a tonne in the near term. The surge is a remarkable rebound from April's low of $58 a tonne.

The producers of ore are Vale do Brazil, Rio Tinto and BHP Billiton.

Now is this the effect of restocking or of a pick-up of demand?
China announced that in June 49.42 million tonnes of steel were produced – an all-time monthly high. We hope this figure is reliable.

The current spot price is almost 15 per cent above the level at which annual benchmark deals have been struck between global miners and big steelmakers outside China. Those agreements cut benchmark prices for the 2009-10 year by about 33 per cent from the 2008-09 level.
Chinese steelmakers and miners remain deadlocked about a benchmark deal for 2009-10.

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Illiquidity

Stocks seem still to be in a correction. We think this can go on a little longer, before the tide turns. We agree with what Dennis Gartman is writing:

…we should also remember, however, that in the course of the past several decades, the most violent market movements have tended to come in late July and early August just precisely because the dealing rooms are emptier. Illiquidity during times of political duress can create its own problems, and we remember the Russian problems of August of a decade ago, and the problems attendant to LTCM that evolved out of that earlier crisis. These were “summer” crises, and there have been others, so just because the doldrums have set in does not mean that they are permanent, and that they cannot develop into something far more unstable. They can; they have and they will… we simply know not when.

But where a lot of people thing that we are looking into the abyss, I wouldn’t bet against a kind of sharp rally.
Be careful out there…

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Agriculture on the roll....

We profit from the retreat of stock indexes this week to take a closer look to the Ag commodities (Agriculture, that is). The supply and demand outlook for agricultural commodities is rather bearish – less supply, higher demand – and the global credit crunch is another reason to assume that global harvests may be curbed and the food crisis for developing countries can be worsened.
We look to the Federal Agricultural Mortgage Corp – the farmer equivalent of Fannie and Freddie (ticker: AGM) – Farmer Mac was rescued early October by its lenders. The damage though was already done to the supply chain.
However, as Ag will flourish in the coming years, these bank activities will boom.

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Clockwork?

It is good old Sean Corrigan, chief investment strategist at Diapason Securities thes days, who assembled following scheme – in his own well-known style to show us that the end is near. Maybe. Almost.

Then…
DOW ‘29: FELL 48% RALLIED 48% FELL 78%
NASDAQ ‘00: FELL 40% RALLIED 40% FELL 81%
TOPIX ‘89: FELL 48% RALLIED 37% FELL 65%
UST YIELDS ‘81: FELL 34% RALLIED 34% FELL 85%
US HOUSEBUILDERS ‘05: FELL 47% RALLIED 45% FELL 82%
Abu Dhabi ‘05: FELL 26% RALLIED 26% FELL 55%
GOLD ‘80: FELL 43% RALLIED 46% FELL 65%
SILVER ‘80: FELL 67% RALLIED 61% FELL 75%
CRUDE ‘90: FELL 32% RALLIED 29% FELL 51% (+)

Now…
SHANGHAI COMP ‘08:FELL 73% RALLIED 70% …….
NDX ‘08: FELL 50% RALLIED 48% …..
MSCI MACHINERY ‘08: FELL 64% RALLIED 60%…
JPYAUD ‘08: FELL 47% RALLIED 46%…
GSCI ENERGY ‘08: FELL 71% RALLIED 71%…
DCI METALS ‘08: FELL 55% RALLIED 55%…
DCI AGRI ‘08: FELL 50% RALLIED 46%….


Another fine article you can find here. Sphere: Related Content

Bulls and bears

When we look to what happened with the major indices on Wall Street the last 5 days, than we see the uphill battle of bulls and bears. For this exercise we take the candlestick version of the S&P500. These candles have very long shadows and a very small body. Meaning that both – longs and shorts – try to win the day. But no party is winning in this game and everything remains very well balanced.

When will this change?
The answer, my friend, on that question is blowing in the wind.

Hat tip to Tim Knight

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Accumulation - something is goin' on

Investment wise we like natural gas more than crude oil. Some big things are happening there, right before our eyes. Who is accumulating at these levels? Strange.






TGIF - Time to go for a pint in the pub. Ireland had a wonderful week. Not only outside the countryside but everywhere. God bless Sphere: Related Content

The sky is not the limit

Technically we’re off to the races. If one looks to the chart of the S&P 500, he’ll have to admit how bullish the chart pattern is. However, this pattern is painted with mark-ups. Meaning that in the end of the session suddenly high volume let prices soar. This was the case on Friday and yesterday.

First let’s look to the opening of yesterdays session. A lot of money came in to paint the steeply higher opening.

And then at the end there was another volume surge in order to paint the tape in a rather positive way.

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Silver shines

There goes gold.
And silver. Is it the weakening dollar or the buying of hedge funds?
Difficult to say, but we have to mention that the 1000 USD/oz barrier is coming in sight again.
But silver is the real high flyer.

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